In advertising, the action is outside

For a business that shrunk in terms of its contribution to the advertising industry in 2006, outdoor advertising sure is popular.

At least four companies, including Deccan Chronicle’s Sieger Solutions, and Madison’s Platinum, have launched units for outdoor advertising (or out-of-home media as the industry calls it) in 2006.

According to AdEx India, an agency that tracks ad spends, in 2006, the advertising industry grew at 23% to Rs16,300 crore, and the outdoor advertising segment grew by just 10%.

“I believe outdoor is a relatively unexploited and unexplored area that presents opportunities for other agencies,” says Sam Balsara, chairman, Madison Communications.

The primary reason for the interest in the outdoor media business is a growth in the supply of sites for hoardings or other outdoor advertising opportunities. Supply is still a constraint in the business, with local laws governing use of hoardings, especially in cities such as Delhi, where they are prohibited in most areas. Projects such as Delhi Metro and the redevelopment of airports have benefited outdoor media agencies by increasing supply; in the second week of January, Times Innovative Media’s bid of Rs150 crore won it the outdoor advertising rights in Delhi’s under-construction international airport. News Outdoor India, a subsidiary of Rupert Murdoch’s News Corporation, recently won a bid for advertising on bus shelters in Bangalore.

Apart from allowing advertisers to address a local, even neighbourhood, audience, the outdoor medium, advertising executives claim, helps cut through the clutter of print and television. Today, there are around 40,000 ads that are aired on television every day; 11,525 ads that appear in newspapers in magazines. Monalisa Das, a senior account planner at Clear Channel, one of the largest outdoor media agencies in the country with a revenue of around Rs50 crore, believes there is another reason: Commutes, she says, have increased, with the typical commuter spending 50% longer on the road today as compared to a few years ago.

The growth of the organized retail business and the boom in real estate have helped the cause of outdoor media agencies: Both are big outdoor advertisers, as are companies in the consumer electronics business. LG, a Clear Channel customer, spends around Rs2 crore a month only on outdoor ads.

The entry of larger firms could help an industry that has traditionally been fragmented and unorganized. News Outdoor India managing director Sumantra Datta rattles off the problems ailing the business: lack of marketing, absence of research, poor product portfolios, and a low perceived respectability.